Saving is a positive step in your journey towards financial independence.
However, saving without a predefined target can feel daunting due to the lack of motivation to achieve a specific “goal” within a set me.
Goal-based saving aligns a purpose with a financial target, in this case, the funds required to fulfil a savings or investments objective.
This approach not only provides direction but also encourages consistent saving habits, ultimately leading to the achievement of longterm financial goals.
It involves identifying a clear and distinct financial objective, factoring in all associated costs, and determining the timeframe required to achieve it.
This process is followed by committing to periodic top-ups and mapping out a plan with the assistance of a Financial Advisor or a financial tool.
Once these steps are complete, the journey begins, requiring discipline and patience to see it through.
If you are new to setting financial goals, start by listing all your objectives, including the smaller ones.
Outline the total amounts required for each goal, prioritizing the essential ones based on what is important and urgent.
When saving with a goal in mind, it’s crucial to distinguish between needs, wants and wishes, as this will help determine the timeframe needed to achieve them, whether short-term, medium-term, or long-term.
A common mistake people make is not choosing the right savings vehicles. The vehicle used for building an emergency fund or retirement savings may differ from the one used to save for an asset.
It’s important to familiarize yourself with various savings solutions that align with your goals, understanding their level of risk and expected returns.
Consulting a Financial Advisor can help identify the most suitable options.
A Money Market Fund can be used to save for an asset or act as an emergency fund and one can have different Money Market Funds for different goals.
Lack of emergency preparedness or saving in a vehicle that allows easy access to funds can lead to withdrawing money prematurely or failing to meet monthly savings targets.
This can be mitigated by developing a strategy that ensures consistent savings toward your goal within a specified timeframe.
Building an emergency fund is one of the best ways to stay prepared for unexpected life events like job loss or medical emergencies.
An emergency fund prevents you from dipping into your savings or taking out a loan in times of need.
She heads Business Development
at Jubilee Asset Management